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Home buyers as Financial Creditors
Why is it in the news?
- The Supreme Court upheld the validity of an amendment to the Insolvency and Bankruptcy Code (IBC),giving homebuyers the right to take legal recourse against developers under three key laws.
More in the news
- The SC bench upheld the amendment that treats homebuyers as financial creditors.
- The bench said the Real Estate (Regulation and Development) Act, or Rera, has to be read “harmoniously with the Consumer Protection Act and IBC" and, in case of any conflict, IBC will prevail.
- This means that an aggrieved homebuyer has the option to seek relief under three laws—Rera, Consumer Protection Act and IBC.
- Concepts:
- Financial creditor:
(1) The term financial debt has been defined as a debt along with interest, if any, which is disbursed against the consideration for time value of money.
- Operational Creditor:
(1) It is defined as – a person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred.
(2) It is defined as – any person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred.
(3) The term operational debt has been defined as a claim in respect of the provisions of goods or services including employment or a debt.
Source
The Hindu.